AS Business Studies

Developing Effective Operations Management - Quality

Recap
What does an operations manager do? How does he/she work with other functions of

a business?
How can a business match supply and

demand?
How can we make a business productive?

What is quality?

What is quality?
Important aspect of operations management

A quality product is one that meets the

specifications of the firm and the needs of the customer Drucker Quality in a product is not what the supplier puts in but what the customers gets out and is willing to pay. What is quality therefore depends on the customers view

What is quality?
A pad of paper or light bulb may be considered of

quality if they do what they are supposed to On the other hand a 400 suit or 1m house may not be considered to be as does not meet customer expectations Expensive doesnt always mean good quality Businesses must always aim to meet customer needs and expectations By doing this could mean good customer service and repeat business

Quality Targets
Depends on type of business Targets will change regularly E.g. A Hotel = customer satisfaction, accurate billing,

quick service in restaurant and reception

E.g. A Hospital = time taken to see patients, average

time spend in hospital by patients, recovery rates and patient satisfaction

E.g. A Factory = proportion of products with defects,

amount of waste and number of returned goods

Why does quality matter?

Why does quality matter?

Poor quality = mistakes that must be put right

Goods may be thrown away, returned and be

replaced Businesses may even be sued, lose customers and reputation Effects of poor quality are expensive Crosby (1979) believes it is far cheaper for a business to get things right first time rather than pay to rectify them later

Quality control
Main way of improving quality is to put

resources into inspecting finished products for faults etc and to remove them All goods/services with defects are found allowing the customer to only ever experience perfect goods/services As a result quality is improved This is known as a quality control system

Quality control
Managers are unsure if this is the best

approach It means that the company assumes that the production staff will make mistakes and that this is acceptable Employees do not take sufficient care of their work Expensive Why not get it right first time round?

Advantages and Disadvantages

Quality Control

Quality assurance
More emphasis on preventing mistakes

Ensures that production is carried out in a

way that prevents mistakes, therefore less emphasis on checks Employees check their own work (self checking) Can also reject work is not acceptable Employees held responsible for their own work

Quality assurance
If they find fault with the work of their

colleagues they can discuss the matter or report it GM workers are told Dont accept errors, dont build errors and dont pass them on Before the view was to leave it to the quality control dept Quality assurance requires training, choosing the right suppliers putting pressure on them to get things right

PDSA
A theory by Edward

Deming that looks at quality control in a cycle Plan what needs to be done (quality targets) Do is to implement them Study is to check that things are going as they should be Action should be taken if things are not of a good quality

Plan

Do

Action

Study

Advantages and Disadvantages

Quality Assurance

Total Quality Management

TQM involves all the employees of an

organisation This quality assurance system appreciates the contribution of all staff in a business All employees of equal importance Everyone has a job to do and deals with customers in some way All employees must therefore think about the quality of their work and who their customers are

Total Quality Management

Involves an impact on both internal customers and

external customers E.g. warehouse staff have to load materials on to the van for delivery, so the delivery drivers are the internal customers of the warehouse staff It is tempting to assume that the company is doing well if profits are high etc but this complacency is dangerous This is because markets are changing rapidly and constantly TQM is a journey and to improve quality will improve competitiveness

Advantages and Disadvantages

TQM

Why might employees resist a TQM approach?

May believe a quality control dept should do

this job, not them May lead to redundancies to those in quality control Involves extra work and may not get extra rewards Affect relationships as have to report their colleagues work if not satisfactory Additional training Do not like change

Quality Standards
A recognition that certain targets have been

achieved and that a system is in place to monitor achievement and take action if required Lots of quality standard systems most common = ISO 9000

ISO 9000
A quality award available to EU businesses In the UK is sometimes known as BS 5750 Awarded to firms who show they have a system

where they regularly measure quality and take action if levels fall below targets Quality targets might include speed of response to queries, delivery times and customer satisfaction ratings Focus is on the firm and if they have a process of quality does not focus on the actual products A business who achieves it is likely to be very focused on quality

The value of IS 9000 awards

Businesses must develop a whole set of procedures

and set and achieve quality targets Lead to higher revenues, lower costs and higher profits Make firm more competitive Can use it in marketing to get more customers Staff may resist this system as means change Also means training staff, investing in equipment to check products, record keeping and then taking action to correct errors

Designing the product

What do internal and external customers want?

Customers have needs and expectations and the

business wants to make a profit Planning is essential as means you are giving the customer what they want but in a cost effective way for the business What equipment is needed? Staff? How is work to be organised? All of this impacts on quality Good to invest more in this stage to get it right as more expensive to correct it later

Improving quality
Managers should be looking to do this at

every opportunity Better quality involves Defining needs of internal and external customers and creating targets around that Introduce a TQM approach Making resources available to meet these targets (cost initially but cost effective in the long term)

Quick questions P257

Case Studies Analysis and Evaluation